NMPF: Border reopening needs more analysis

The National Milk Producers Federation has asked the White House’s Office of Management and Budget to better analyze the economic impacts of a reopened Canadian border.

The Bush Administration is in the final stages of reopening the U.S. border to all types of Canadian cattle — including dairy animals — born after March 1, 1999. The proposed regulatory change includes milk cows to be used for breeding purposes.

NMPF believes that the USDA’s cursory review of the potential economic impacts of the cattle trade “is inadequate, and doesn’t fully account for the economic losses that could occur as a result of a reopened border,” said Jerry Kozak, president and CEO of NMPF, in a letter sent Aug. 17 to the Office of Management and Budget. The Office of Management and Budget is responsible for conducting an economic review of all major regulatory changes proposed by the federal government.

NMPF estimates that additional annual imports of approximately 47,000 Canadian dairy heifers could increase milk production by 0.5 percent per year over the next five years, reducing farm-level milk prices by 18 percent and dairy producer revenue by $5 billion, on average, during that time period.

In addition, a surge in Canadian dairy animals will reduce the current value of a producer’s dairy herd, “substantially reducing” his net worth, Kozak said.

Because Canada’s government has continued to find cattle that have bovine spongiform encephalopathy, the USDA is estimating that up to 700 BSE-infected cattle could be exported to the U.S. during the next 20 years. Such a development could reduce beef prices — and thus the revenue that dairy producers derive from cattle sold for meat packing — as a result of the resumption in Canadian exports.

“The existence of BSE-infected animals could substantially undercut demand for beef, as it has done in Europe. It could also lead to greater discounts for dairy cows at slaughter,” Kozak said.

The letter goes on to state that while NMPF does not object to the proposed regulation’s review of Canadian cattle designated for immediate slaughter, the regulatory analysis for dairy breeding animals is incomplete “and does not justify that part of the proposed rule.”

NMPF is asking for an opportunity to further assist the Office of Management and Budget with a full review of the potential impact of this proposed regulation.